Professional Accountancy, giving you the life of Riley...

Meaning - An easy and pleasant life.

We strive to make the financial aspects of running
your business or organisation as easy as possible.
We're more than just accountants.

We can help you grow your business, and advise you
on the best strategy to give you...the life of Riley.

How Does Gift Aid For Charity’s Work – Is It Really Money For Nothing?

Date posted: January 30, 2017

gift-aid

Gift aid is a scheme that allows UK charities to claim back basic rate tax on donations it receives, on the basis that the tax has already been paid by the donor. This means that you can claim back from the government 25p for every £1 donated.

A common misconception is the claiming of gift aid is an additional cost to the donor, this is not the case. The claiming back of this 25% tax does not cost the donor anything over and above their original donation, assuming they have paid the equivalent in tax. For the donations received from the donor to be eligible the donor needs to confirm that they have paid at least the same amount in tax in the relevant tax year, as will be claimed back by the charity, if the donor makes multiple donations to multiple charity’s these need to be amalgamated to check.

To use the scheme, the charity would need to register with HMRC, and the charity needs to make sure that they collect the required information from the donor, including donors full name and home address (being at least home number and postcode). There are example forms prepared by HMRC for this, there are different forms for single donations or multiple donations, and for sponsored events. There is an administrative burden on the charity when setting up and running the scheme, so this will need to be considered to check it is worth the potential reclaim.

For a donation to be eligible for gift aid, it must be received from an individual and must not be payment for goods or services, the charity also needs to comply with the donor benefit rules, whereby and benefit received by the donor for their donation does not exceed certain financial limits.

Donation Maximum value of benefit
Up to £100 25% of the donation
£101 – £1,000 £25
£1,001 and over 5% of the donation (up to £2,500)

If the benefit, which might be anything from a pin badge to a larger item to say thank you, exceeds these limits then the donation is not eligible for the gift aid scheme. Small items such as a newsletter or a plaque do not count as benefits.

If the charity is holding a charity auction event then the same financial limits above can be applied for auction bids for items that have a clearly identifiable retail value, if the item being auctioned is one that ‘money can’t buy’ then there is potentially no retail for that item, and the value is taken as being the price paid, which being 100% of the donation, would not be eligible for the scheme.

If the charity is holding an event, where an element of the ticket price is voluntary, then this voluntary element could be treated as a donation and be eligible for the scheme, but the remainder of the ticket price would not be.

It is important for charity’s to maximise their income and with some careful planning and consideration, it may be possible to structure your donations schemes, events, and fundraising to maximise the potential for gift aid and get some money back for nothing!

Are you a charity and need help with your accounting? See how we can help here.

New Flat Rate VAT changes from April 2017 – Are you ready?

Date posted: January 23, 2017

New Fat Rate VAT Changes From April 2017

Many small businesses, including lots of our clients, use the VAT flat rate scheme which simplifies the way that you calculate the VAT to pay over. In addition, some businesses with limited input VAT may find that they actually pay over less VAT than they would under normal VAT accounting rules. Consequently HMRC are clamping down on this potential misuse of the scheme and bringing in some new Flat Rate VAT changes. From 1 April 2017, any business operating Flat Rate VAT must determine whether they meet the definition of a limited cost trader. If they do then they must use the new 16.5% flat rate percentage.

What is a limited cost trader?

A limited cost trader is defined as one whose VAT inclusive expenditure on goods is:

  • Less than 2% of the VAT inclusive turnover OR
  • Greater than 2% of their VAT inclusive turnover but less than £1,000 per year

The calculations are based on the relevant accounting period with the £1,000 threshold being pro rata if the accounting period is not a year in length. Goods specifically exclude the following items of expenditure:

  • Capital expenditure – which includes computers, mobile phones, office furniture, tablets and printers
  • Food or drink for the employees of the business
  • Vehicles, vehicle parts or fuel

In addition, the goods must be used exclusively for the purpose of the business and cannot include the costs of any goods used part for private use. HMRC give the specific example of printer ink and stationery that are used partly for the office and partly for home as not being eligible goods.

Anti – forestalling provisions

You cannot issue invoices or receive payment before 1 April 2017 for services or goods supplied on or after 1 April 2017. Any such transactions will be caught by HMRC anti – forestalling provisions.

So what now?

If you currently operate under the VAT flat rate scheme and will be classed as a limited cost trader then you may wish to opt out of the scheme effective from 1 April 2017. To leave the scheme you must write to HMRC and they will confirm your leaving date. Please get in touch with us for advice if you think that you may be affected by these new Flat Rate VAT changes or click here to see how we can take the headache out of your VAT returns.

Help! How do I pay myself a dividend?

Date posted: January 16, 2017

‘How do I pay myself a dividend’ is the question that we are most commonly asked by our clients.

If you are a director of your own limited company, you will probably pay yourself a small salary and take the rest of your income as a dividend. This is the most tax efficient way for you to extract your cash, as dividends are not subject to national insurance.

However, in order to ensure that your dividends stand up to scrutiny from HMRC it is important that they are paid correctly.

Dividends are paid to shareholders from the retained profits of the business. The retained profits are calculated after allowing for corporation tax (currently at 20%) on the net profit of the business. The net profit is calculated as the income less the business expenses such as salaries, travel and subsistence, telephone costs etc. The retained profits are calculated on a cumulative basis and also include the profits after tax for earlier years which haven’t yet been paid out as a dividend.

If you get this calculation wrong and there are insufficient retained profits out of which to pay your dividend then your dividend could be illegal which causes all sorts of problems when we prepare your year-end accounts.

Once you have done your sums correctly, the next step is to vote the dividend at a directors meeting and create the meeting minute and dividend voucher. We will provide you with templates to create these documents yourself or alternatively we can offer this service for you, but either way, it is crucial that the paperwork gets done.

Don’t forget that dividends must be paid at a pro rata amount to every shareholder for each class of share on which a dividend has been voted. We can talk to you about how to improve your tax planning flexibility by using different classes of shares, just get in touch if you think you may benefit.

You then need to make sure that you correctly make the payment; the dividend must be paid to a bank account belonging to the individual shareholder named on the share certificate. If you have a joint bank account then this can be used for each shareholder who is named on the account. Make sure the payments are recorded in the books, recorded as dividends and that the narrative “dividend” is used for any online bank transfers.

It is also possible to “pay” a dividend as a credit to a director loan account, but in order to evidence the transaction you need to make sure that an appropriate entry is made in the accounting records on the date that the dividend is declared.

Dividends can be paid as often as you like, many of our clients choose to process dividends on a monthly or quarterly basis, although it can be as ad hoc as you like, as long as you go through each of the necessary steps every time that you make a dividend payment, then the frequency is up to you.

Job vacancy – Apprenticeship Business Admin Assistant

Date posted: January 13, 2017

A fantastic opportunity has arisen for a Business Admin Apprentice to join the Riley&Co team and develop a promising career.

As an apprentice within Riley&Co, you will work alongside an experienced team, get real hands on experience and gain an industry recognised qualification.

In brief about the role –

  • To assist in the maintenance of a high quality working environment and to project a suitable corporate image for the Company.
  • To undertake reception duties, answering the telephone, deal with enquiries and greeting clients in a professional manner.
  • To assist toward the professional appearance of communications and other documents issued.
  • To assist with the Company’s incoming and outgoing post ensuring the franking machine is maintained.
  • To assist with the sourcing and maintenance of the Company’s stationary requirements.
  • To assist in the efficient and continuous operation of the Company’s administration and housekeeping systems.

Personal Qualities

  • Excellent communication skills,
  • Ability to prioritise and plan own workloads,
  • Good level of literacy and numeracy,
  • IT literate,
  • Excellent timekeeping and attendance record,
  • Enthusiasm.

Riley&Co has been providing the highest quality accountancy, audit and tax planning for over 25 years and has become one of the leading independent practices within Calderdale.

Our history charts the success we have enjoyed in helping Calderdale businesses and individuals achieve their financial goals and tax objectives.

If you an articulate, enthusiastic individual and want to be a part of this continued success, for more information please contact Jan Greenwood (Practice Manager) on 01422 341019 or email jan@rileyandco.co.uk